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XBRL: A Step forward for e-Filings Everywhere

XBRL: A Step forward for e-Filings Everywhere. Walter Hamscher ( walter@hamscher.com ) Executive Committee, XBRL International Consultant to PricewaterhouseCoopers. XBRL: A Step forward for e-Filings. XBRL Review E-Filing and US Federal financial system Overview of the processes and systems

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XBRL: A Step forward for e-Filings Everywhere

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  1. XBRL: A Step forward for e-Filings Everywhere Walter Hamscher (walter@hamscher.com) Executive Committee, XBRL International Consultant to PricewaterhouseCoopers

  2. XBRL: A Step forward for e-Filings • XBRL Review • E-Filing and US Federal financial system • Overview of the processes and systems • Points of view • FFIEC and public – data sharing efficiency • Bank – improved compatibility platform • Vendor – differentiation opportunities • Consortium – proves that collaboration works • Lessons for other data collection systems

  3. Prudential Equities says: “The Impact Of XBRL Will Be Pervasive And Positive, We Believe. In his classic film, Brazil, former Monty Python comic-turned-director Terry Gilliam presents a nightmare technological dystopian vision of a world where sophisticated computers exist, but humans copy information from sleek glass screens onto paper by manually hammering the keys of ancient Smith-Coronas. To a surprising extent, in our opinion, we still live that nightmare today.”

  4. The business reporting supply-chain Business Operations Internal Reporting External Reporting Investment, Lending, and Regulation Processes XBRL XBRL XBRL Companies Financial Publishers and Data Aggregators Investors Participants Trading Partners Management Accountants Auditors Regulators Software Vendors

  5. <jg:opc contextRef="rg00jpy">-3181000000.</jg:opc> <jg:opc contextRef="rg00usd">-4613000.</jg:opc> <jg:opc contextRef="rg01jpy">-3583000000.</jg:opc> <jg:opc contextRef="rg01usd">-5196000.</jg:opc> <jg:opc.acq contextRef="rg00jpy">0.</jg:opc.acq> <jg:opc.acq contextRef="rg00usd">0.</jg:opc.acq> <jg:opf contextRef="ins00usd">228000.</jg:opf> <jg:opf contextRef="ins00jpy">84000.</jg:opf> <jg:opf contextRef="ins00jpy">73000.</jg:opf> ?

  6. Multiple, specialised reporting schemes All companies bear costs of all reporting channels No incremental benefit from one initiative to the next Common reporting scheme based on XBRL Companies’ initial costs the same, subsequently reduced All other agencies’ e-filing benefits from common base E-Filing Costs: The filers’ perspective Company Registrar Exchange and Regulator Central Bank Tax Agencies Company

  7. XBRL Theory

  8. XBRL Practice

  9. XBRL: A Step forward for e-Filings • Over 8,300 banks’ data • Up to 1200 data points per filing bank • Virtually all based on GAAP • XML-based e-Filing adds value • Common interface for filings via the Internet • XBRL adds value to XML-based e-Filing • Taxonomy (data dictionary) sharing • Portable and higher level of validation • 1st live XBRL filing will be for period 3Q ‘04

  10. XBRL: A Step forward for e-Filings • XBRL: a step forward for e-filings • E-Filing and US Federal financial system • Overview of the processes and systems • Points of view • FFIEC and public – data sharing efficiency • Bank – improved compatibility platform • Vendor – differentiation opportunities • Consortium – proves that collaboration works • Lessons for other data collectors

  11. FFIEC Structure

  12. Call Reports • Call Report content determined by the inter-agency FFIEC (Federal Financial Institutions Examination Council) • Forms and instructions are available on www.FDIC.gov

  13. Call Reports • The Call Report filed by banks with foreign offices includes: • 25 schedules • 1,200+ items • Instructions: 450 pages plus GAAP references • Validations = 1,200

  14. Call Reports • Call Reports use GAAP for recognition and measurement purposes • Structured to require that all banks report details consistently • Ensures comparability among reporters

  15. Call Reports • Public is downloading about 1 million Call Report pages per year from www.FDIC.gov • Data is distributed to analytical systems that allow customization and acquisition of databases

  16. XBRL: A Step forward for e-Filings • XBRL Review • E-Filing and US Federal financial system • Overview of the processes and systems • Points of view • FFIEC and the public – data sharing efficiency • Banks – improved compatibility platform • Vendor – differentiation opportunities • Consortium – proves that collaboration works • Lessons for other data collection systems

  17. Validation and Submission • Public • Taxonomy • Formulas • Other links • Analyze • Formulas Pre-validate Analysis Instance Post-validate Re-validate Instance with explanations

  18. Validation Levels • Data elements • “Five year residential loans” is represented by fdic:riad0348 • Primitive data types • The value of riad0348 must be nine digits and not negative • Compound data structures • A Maturity Breakdown must contain Loans, Securities and Derivatives • Calculated data values • RIAC4410 = RIAC4411 + RIAC4412, plus or minus 10,000 • Co-Constraints among data values: Formulas • Box27 is True if and only if Box28 is the same as Box29 • Cross-document constraints • Var50 is True if Box28 is larger than any value ever reported.

  19. XBRL: A Step forward for e-Filings • XBRL Overview • E-Filing and US Federal financial system • Overview of the processes and systems • Points of view • FFIEC and the public – data sharing efficiency • Banks – improved compatibility platform • Vendor – differentiation opportunities • Consortium – proves that collaboration works • Lessons for other data collectors

  20. Data Sharing Efficiency Immediate benefit: more timely availability of data Open standard facilitates comparisons Data usable by non-banking organizations Overall cost reduction “…the cost of current operations, which would no longer be necessary with the CDR, are eliminated as CDR is phased into operations. Further, the cost of the CDR contract is added to the cost of operations. The cost estimates were projected over a 10-year period with a 3-percent annual inflation factor. Using these amounts, alternative 2, CDR, results in a $27 million dollar reduction in costs over the 10-year period. A discount factor of 5.1 percent was applied to the cost reductions to arrive at a return on investment for the CDR of $17.9 million (133 percent) over the 10-year period.” Office of the Inspector General Audit Report No. 03-018 dated 21 March 2003 Point of view:FFIEC and the Public Interest

  21. Point of view:Banks • Improved compatibility and consistency • Common format and terminology • FFIEC Forms 031 and 041 = 1200 data items • Eventually over 50 different reports • Opportunity to align with market discipline reporting via XBRL

  22. Point of view:Software Vendors • Automation Possibilities • Differentiation • Extend Reach

  23. Point of view:XBRL International consortium • Collaboration works! XBRL Working Group Call Report Vendor Working Group Financial Institution Working Group Tool Vendor Working Group

  24. XBRL: A step forward for e-Filings • XBRL Overview • E-Filing and US Federal financial system • Overview of the processes and systems • Points of view • FFIEC and the public – data sharing efficiency • Banks – improved compatibility platform • Vendors – differentiation opportunities • Consortium – proves that collaboration works • Lessons for other data collectors

  25. Accelerating Positive Change • The type and timing of validation processing impacts the filers’ work flow. • Validations are essential in order to improve the overall processing of filings – so collaborate with other agencies • Multiple validation environments and stages take place; that becomes visible to filers but is unfamiliar – make it worthwhile! • Whether or not to have official “forms” will be a key decision. • Selective data collection is good regulation strategy • Banks’ filing preparation processes are tied to forms • Maintenance of many dependent modules is key • Without setting expectations, filers prefer for regulators to use less flexible technology - all lose!

  26. Readiness for XBRL Committed to Current Processes or Technology Aware but not yet using Internet and XML Technology Examining Business Requirements Committed to Improving End-to-end Reporting Process Low High

  27. An XBRL reporting system will disseminate relevant information in a flexible, usable format to markets on an almost real-time basis… Too much damage has occurred to the U.S. economy and the capital markets because of the lack of timely and transparent financial information. I have confidence that XBRL will eliminate those deficiencies. The Hon. Richard H. Baker Chairman, House Capital Markets Subcommittee

  28. Fromwww.fsa.uk.gov/regulatory_reporting The Integrated Regulatory Return… will combine all of the data we request from firms into one return, helping us monitor them more effectively and reducing costs for firms and us. …we have decided to use the Extensible Business Reporting Language (XBRL) to collect, validate and distribute the data in the Integrated Regulatory Return.

  29. XBRL: A Step forward for e-Filings Everywhere Walter Hamscher (walter@hamscher.com) Executive Committee, XBRL International Consultant to PricewaterhouseCoopers

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